Canada set to resolve U.S. wine dispute in revised trade accord

Canada and U.S. reach new trade deal

The Canadian government agreed in the new U.S.-Mexico-Canada trade accord to roll back a series of retail wine restrictions, acquiescing to American demands that were being heard at the World Trade Organization.

Canadian Trade Minister Chrystia Freeland said in an undated letter to U.S. Trade Representative Robert Lighthizer that the province of British Columbia will modify by Nov. 1, 2019, its requirement that retail stores only sell imported wines through a “store within a store” rather than on the same shelves as domestic wine bottles.

The development could resolve a long simmering WTO dispute between the U.S. and Canada, and serves as another example of how the Trump administration aims to resolve its trade grievances outside the context of the WTO. If Canada follows through with its pledge it will increase market access for U.S. wine producers.

The U.S.-Mexico-Canada agreement still requires ratification from the legislative branch of each participating government.

In 2017, U.S. wine exports to British Columbia totaled $56 million, and U.S. wine had a 10 per cent share of the market, according to statistics provided by the office of the U.S. Trade Representative.

The Trump administration’s first WTO dispute filing was the Canadian wine case, in which the U.S. alleged Canada’s retail wine restrictions violate WTO rules that require countries to offer the same treatment to imported products as to like products of national origin.

Lighthizer said the U.S. agreed to take “no further action” relating to the WTO dispute prior to Nov. 1, 2019, according to a side letter published Sept. 30 on the USTR website.

If British Columbia revises the wine measures the U.S. “shall join Canada to notify the WTO Dispute Settlement Body that the United States and Canada have reached a mutually agreed solution,” the letter said.

Lighthizer also warned that if British Columbia fails to revise its wine restrictions the U.S. will advance the WTO dispute proceeding against Canada.